The Top 3 Mistakes Bad Credit Customers Make When Buying a Used Car

August 12th, 2016 by
Top bad credit mistakes

If you have challenged credit, you need to be as realistic as possible about how large a monthly payment you can handle. The last thing you want to do is find out a few months into your loan that you’ve bitten off more than you can chew.

Many people who need a car cause themselves a lot of stress because they’re worried about their credit. Maybe it’s a bankruptcy, or not having any credit at all, or a really low credit score, accounts that are in collections, or other credit problems. Bad credit car loans are definitely possible, but here are the top mistakes we see challenged credit customers make all the time:

1. Buying a Car You Really Can’t Afford
It’s all too easy to fall in love with the car you want, but is it a car you can really afford? This is where you have to let your head overrule your heart. If you’re already in a bad credit situation, you’re starting out at a disadvantage because you won’t get the best interest rate on a loan. You need to be as realistic as possible about how large a monthly payment you can handle. The last thing you want to do is find out a few months into it that you’ve bitten off more than you can chew, which can lead to missed payments or even a repossession, neither of which is going to do any favors to your credit scores. Know your monthly budget and how much you can afford.

2. Not Shopping Around for the Best Car Loan
Not all car lenders are created equal. They actually differ a lot on interest rates and other terms, so it’s worth making sure any financing you accept is the best you can do. But shopping for a car is hard enough, which makes more shopping for a car loan seem like a hassle. If you find the right used car dealership, you won’t have to do all that legwork yourself. Choose a dealership that has a robust financing program. The best-case scenario is a dealership that already has a large network of lenders they deal with. The dealership can help you find the lender that will give you the best possible terms given your credit situation. They’ll submit applications on your behalf to multiple lenders, and when all those lenders are actively competing for you business, that’s how you get the best terms possible.

3. Failing to Choose a Reputable Dealership
Dealerships tend to have lots of inventory to choose from, all in one place, which is very convenient. But not all used car dealerships are worthy of your business. The best dealerships offer transparent, up-front, no-haggle prices that are competitive, will happily help you find the best financing possible, offer only top-quality cars for sale, provide warranties and history reports for every car, and even a money-back guarantee. There should be no pressure to “upsell” you on cars out of your budget. The dealership should let you set the pace and follow your lead. A dealership lacking any of those features is one you should probably avoid.

Just because you have bad credit doesn’t mean you can’t get a car loan and the vehicle you’re looking for. Be completely upfront and honest about your situation, and choose a reputable dealership who will work with you to get a car and a loan that fits you. At Auto City, we have partnered up with the best lenders and banks and we work with customers with bad credit every day. Bad credit, no credit, open or recent bankruptcy, collection accounts, repossessions – these are just some of the situations we have helped thousands of customers with. If you have bad credit and are looking for an auto loan, apply now to get started!